Holy Name running tests on possible merger

By Beth Fitzgerald,
June 4, 2013 at 3:00 AM

Michael Maron says Holy Name is weighing a merger to effectively deliver care to patients at the Teaneck hospital. - (AARON HOUSTON)

Michael Maron is convinced Medicare and commercial health insurers eventually will stop paying hospitals on a fee-for-service basis, and instead make bundled payments that cover care wherever it's delivered, be that the hospital, doctor's office, rehab center or at home with a visiting nurse. So the chief executive of Holy Name Medical Center, in Teaneck, is preparing for that future by striving to deliver high-quality, efficient care — and by exploring a merger with another hospital or health care system.

“The most important thing is to maintain a close relationship with our patients,” he said, because deep patient knowledge yields better care. That kind of knowledge can put cancer care offered at Holy Name on par with centers like New York's Memorial Sloan-Kettering, Maron said: “It comes down to the doctors, the nurses, the team that is caring for you. How well do they know you? If I knew you when you were healthy, then you are diagnosed with cancer, I can bring all that knowledge into making decisions about how I'm going to treat you. Knowing the person is a big part of medicine.”

Maron said he'd prefer an independent Holy Name, but he's scouting out a deal that could build on the hospital's strong patient relationships — so “for us to do a deal with Virtua (in South Jersey) makes absolutely no sense.” Instead, Maron cited Hackensack University Medical Center; Valley Hospital, in Ridgewood; and St. Joseph's Regional Medical Center, in Paterson. A local partner “makes sense, because you are controlling a geographic market and binding that same population of people who have a community relationship with each other. Health care is local, and you can't lose that perspective.”

Maron said he's talked to at least half a dozen New Jersey hospitals in the state, but doesn't feel pressured to make a deal. “Right now, we are on a dual track, so I don't get consumed by it,” Maron said. “I spend some time talking (to other hospitals), and the majority of my time asking, 'If we remain a stand-alone, how do we make this work?' ”

Derek DeLia, an associate research professor at the Rutgers Center for State Health Policy, said the Medicare-piloted accountable-care organizations — which pay health care providers a fixed annual sum to care for a patient, then allow providers to share in the savings — are “the slow glide path to getting to bundled payments.” He said it's not surprising that Holy Name and other standalone hospitals across the state are talking about joining larger health systems, which could ease their transition to bundled payments.

“When you move to bundled payments, you are putting more of the risk on to the provider, and larger organizations are better able to manage risk,” DeLia said.

Holy Name has formed a Medicare ACO — one of eight in New Jersey, which has become a national leader in embracing this new patient-care paradigm, according to Betsy Ryan, president of the New Jersey Hospital Association.

“If Medicare ACOs are proven to work — and we're hearing some preliminary success stories around the state — I think there would be a move to bundled payments,” Ryan said. “The old paradigm was you wanted every hospital bed filled. Now you're rethinking it — you want people to stay well, you want them to see their primary-care doctor. If they come to the hospital, you want to make sure when they're discharged, they're not readmitted.”

Holy Name has 360 beds and an 80 percent average occupancy rate; about half its patients are covered by Medicare, according to the hospital. Revenue of about $300 million a year yields an operating margin of 1.5 percent.

The hospital has specialties in stroke, cardiac disease and cancer care, and five years ago, it built a new emergency department that sees about 65,000 patients a year. Maron said it takes two hours for a patient to be treated in the ER and then released or admitted, which he said could take six or eight hours at other hospitals. About 38 percent of the hospital's admissions come through the ER.

Maron vowed to preserve Holy Name's mission of providing essential services regardless of whether they make money. Holy Name runs a deficit at its in-patient hospice, Villa Marie Claire, in Saddle River, and closes the difference through fundraising. “And we are lobbying for payment reform — the reimbursement from Medicare is too low,” Maron said.

For 20 years, doctors and staff have traveled to Haiti to aid Hospital Sacre Coeur, and last year Holy Name began operating it at the request of the hospital. The Haitian hospital has a $3 million annual budget, and while Holy Name supplies $1 million of that, Maron expects that total to decline as Holy Name introduces efficiencies and raises charitable contributions to defray the cost.

And there have been other benefits to that partnership, too. Maron said Holy Name staff who work in the Haiti hospital return to New Jersey with a better appreciation for what they have at home, for each other and for their work: “What I never expected is that this has become an incredible employee engagement tool for us.”